FM Nirmala Sitharaman holds meet for ‘big ticket’ budget reforms

Announced in the 2024-25 Union Budget, the review of the Income Tax Act is touted as one of the most significant undertakings in recent years. Spearheaded by the Chief Commissioner of Income Tax VK Gupta, an internal committee comprising 22 specialised sub-committees has been formed to tackle various aspects of the law. The committees are responsible for ensuring that the suggested amendments are in line with international standards, improve taxpayer compliance, and enhance the government's revenue efficiency.

These sub-committees have actively engaged with domain experts and stakeholders to gather feedback and craft recommendations. The Ministry of Finance has also opened its doors to public input, receiving over 6,500 suggestions since the launch of an online portal on October 6, 2024.

“Our goal is to make the Income Tax Act simpler and more comprehensible for taxpayers,” a senior government official told Moneycontrol.

The current phase focuses on streamlining legal texts and eliminating outdated provisions. The reforms are expected to culminate in early 2025, paving the way for a modernised taxation regime.

Customs Duty restructuring

Another key area of focus is the rationalisation of customs duties. The initiative, announced in the 2024 Budget, seeks to simplify tariff structures, address the issue of duty inversion, and reduce disputes related to customs duty classifications.

Duty inversion, which occurs when the tax on raw materials is higher than that on finished goods, has long been a concern for domestic manufacturers. “By correcting this anomaly, the government aims to boost local industries and enhance India’s competitiveness globally. Simplification and rationalisation of laws will enhance ease of doing business for the taxpayers,” another government official said.